Borrowing amount for 1 or 2 persons.

lacmac

I used the "How much can i borrow" calculator on here and at first i said i was 1 person applying and just combined my partners salary to mine.
It said i could borrow up to £228,000

Next i said was 2 persons applying and split our income.Now the borrowing amount went down to a max of £160,000

Why is that?

DVardysShadow

N times 1st income plus M times 2nd income. M is less than N.

First time around it was N * [S1 + S2]

Second time around it was [N * S1] + [M * S2]

blueberrypie

Assuming it's the reasoning you're asking about, rather than the mathematical formula...it's because despite the old adage, two can't (or at least usually don't) live as cheaply as one.

Supporting twice as many people means that some costs, like food and utilities, increase. Some costs, like clothing and transportation, can double. The amount you can borrow isn't just based on your income, it's based on "affordability". Two people = higher costs = less money available for mortgage payments.

lacmac

Ah ok,i understand now.I work as a seaman,i spend most of the year away.So if i went to a mortgage adviser would my borrowing amount increase because of that? as i do not spend anything whilst im away.

Senior_Paper_Monitor

Not for the lender it wouldn't (set formulas at that stage).

It woudl reflect in the broker's own budget analysis - might assist slightly in an income stretch argument with a small lender (but in current environment even they tend to be 'rules are rules')

blueberrypie

lacmac wrote: »

Ah ok,i understand now.I work as a seaman,i spend most of the year away.So if i went to a mortgage adviser would my borrowing amount increase because of that? as i do not spend anything whilst im away.

I wouldn't expect it to make a great deal of difference, but some lenders might take it into consideration. Talking to an independent broker would be the best bet - they know which lenders consider which factors important.

lacmac

Mmmm that's not so good.I was hoping for a mortgage in the region of £180,000 and could easily afford it over a 10yr period.

Senior_Paper_Monitor

Calculation varies coniderably by lender - go to a whole of market broker for best selection of options

blueberrypie

If you can manage a monthly payment of about £1800/month (which is what £180k over 10 years at 4% will cost), it shouldn't take long to save and increase the size of your deposit. But as SPM says, talk to a whole-of-market broker - if you're around the edge of affordability, you need more than the generic info you can get on a forum like this.

lacmac

Well i've worked out we can afford £2200 a month and we have £30,000 for a deposit